Question : Objective 7.3 1) The actual information pertains to the month of : 1212147

 

Objective 7.3

 

1) The actual information pertains to the month of September. As part of the budgeting process, Kriger Fencing Company developed the following static budget for September. Kriger is in the process of preparing the flexible budget and understanding the results.

 

ActualFlexibleStatic

ResultsBudgetBudget

Sales volume (in units)10,000      12,500

 

Sales revenues$500,000$$625,000

Variable costs256,000$ ________300,000

 

Contribution margin244,000$325,000

 

Fixed costs229,000$ ________225,000

Operating profit$ 15,000$       $ 100,000

 

The primary reason for low operating profits was ________.

A) the variable-cost variance

B) increased fixed costs

C) a poor management accounting system

D) lower sales volume than planned

Answer the following questions using the information below:

 

The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results.

 

ActualFlexibleStatic

ResultsBudgetBudget

Sales volume (in units)11,000      10,000

 

Sales revenues$238,000$$230,000

Variable costs150,000$ ________180,000

 

Contribution margin88,000$50,000

 

Fixed costs36,000$ ________35,000

Operating profit$ 52,000$       $ 15,000

 

2) The flexible budget will report ________ for variable costs.

A) $136,364

B) $198,000

C) $30,000

D) $13,583

 

3) The flexible budget will report ________ for the fixed costs.

A) $536,000

B) $35,000 Favorable

C) $35,000

D) $1,000 Unfavorable

 

4) The flexible-budget variance for variable costs is ________.

A) $30,000 favorable

B) $31,000 unfavorable

C) $30,000 unfavorable

D) $48,000 favorable

5) The sales-volume variance is sometimes due to ________.

A) the difference between selling price and budgeted selling price

B) quality problems leading to customer dissatisfaction

C) unexpected increase in manufacturing labor time

D) unexpected increase in the use of quantities of inputs of raw material

 

6) An unfavorable sales-volume variance could result from ________.

A) an inappropriate assignment of labor or machines to specific jobs

B) competitors taking market share

C) an inefficiency of a purchasing manager in bargaining with suppliers

D) a decrease in actual selling price compared to anticipated selling price

 

7) If a sales-volume variance was caused by poor-quality products, then the ________ would be in the best position to explain the variance.

A) production manager

B) sales supervisor

C) financial supervisor

D) logistic manager

8) The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results.

 

ActualFlexibleStatic

ResultsBudgetBudget

Sales volume (in units)11,000      10,000

 

Sales revenues$238,000$$230,000

Variable costs150,000$ ________180,000

 

Contribution margin88,000$50,000

 

Fixed costs36,000$ ________35,000

Operating profit$ 52,000$       $ 15,000

 

The primary reason for high actual operating profits was ________.

A) the variable-cost variance

B) increased fixed costs

C) flexible budget variance for revenues

D) lower sales volume than planned

Answer the following questions using the information below:

 

Genent Company manufactures tires. Some of the company’s data was misplaced. Use the following information to replace the lost data:

 

 

Actual Results

Flexible Budget Variances

Flexible Budget

Sales-Volume Variances

Static Budget

Units sold

495,000

 

495,000

 

453,750

Revenues

$185,150

$4,400 F

(A)

$6,160 U

(B)

Variable costs

(C)

$880 U

$69,780

$10,300 F

$88,080

Fixed costs

$36,430

$3,770 F

$40,200

$40,200

Operating income

$78,060

(D)

$70,770

(E)

$66,630

 

9) What amounts are reported for revenues in the flexible-budget (A) and the static-budget (B), respectively?

A) $164,320; $178,990

B) $180,750; $186,910

C) $185,150; $177,920

D) $178,990; $186,910

 

10) What are the actual variable costs (C)?

A) $72,800

B) $70,660

C) $62,640

D) $54,080

 

 

 

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